A month before he was inaugurated, Barack Obama pinpointed one of the biggest challenges he would face as president. Could he restore confidence in government, even as he was proposing the biggest federal intervention in the domestic economy in a generation?

At the time, Obama said he did not think his victory marked an abrupt end to the skepticism ushered in by President Ronald Reagan toward top-down government and social engineering by Washington.

"What we don't know yet is whether my administration and this next generation of leadership is going to be able to hew to a new, more pragmatic approach that is less interested in whether we have big government or small government; they're more interested in whether we have a smart, effective government," he said on that day in December 2008.

As Obama marks the first anniversary of his inauguration on Wednesday, that question remains one of the most politically charged of his presidency -- and central to the politics of this election year -- and will hinge on how Americans judge Obama and his policies.

Will the public conclude that his policies worked, however much they may cost and however much they may entail more government intervention in the economy? Or will they regard his agenda as intrusive and ineffective big government? What steps may Obama take to alleviate public discontent over these first-year decisions?

The stakes are sizable, with an early referendum coming Tuesday in a special Senate election in Massachusetts. Democrats are fighting to hold the seat once occupied by the late Sen. Edward M. Kennedy, a dramatic turnaround in a contest previously seen as an almost certain win. A Republican victory would imperil the administration's health-care initiative and cast a pall over already-nervous Democrats, who fear considerable losses in November's midterm elections.

Obama receives mixed reviews for his first-year performance, according to a new Washington Post-ABC News poll. His approval rating stands at 53 percent, with 44 percent disapproving. Among independents, 49 percent approve, the lowest of any of his recent predecessors at this point in their presidencies.

Majorities disapprove of his handling of the major domestic issues -- the economy, health care and the federal budget deficit. But more approve than disapprove of his handling of terrorism and Afghanistan, and he has broad support for his response to the attempted terrorist bombing on Christmas Day.

The good feelings that surrounded Obama in the months after Inauguration Day have faded. The week he was inaugurated, just 19 percent of Americans said the country was heading in the right direction; by April, that had risen to 50 percent. Today it has slipped to 37 percent.

The poll also shows how much ground Obama has lost during his first year of trying to convince the public that more government is the answer to the country's problems. By 58 percent to 38 percent, Americans said they prefer smaller government and fewer services to larger government with more services. Since he won the Democratic nomination in June 2008, the margin between those favoring smaller over larger government has moved in Post-ABC polls from five points to 20 points.

White House advisers maintain that many of Obama's actions are temporary and not a permanent enlargement of federal power at the expense of private industry. White House Chief of Staff Rahm Emanuel said such actions as the bailouts of the banks and auto companies "were emergency interventions to stabilize" an economy on the edge of a depression.

The promise of change, which echoed so powerfully during his campaign, is now another source of division. At the time of his inauguration, three-fourths of the country said Obama would bring needed change to Washington. Today the nation is evenly divided on whether he has. Three-fourths of Democrats say yes; three-fourths of Republicans and a majority of independents say no.

Echoes of Reagan?

Around the White House these days, the president's advisers draw analogies with Reagan to paint a hopeful portrait of Obama's weakened standing. Reagan, they note, had approval ratings around 50 percent at the end of his first year in office and ended up winning a landslide reelection victory in 1984. What they don't say so vocally is that Reagan's approval dipped into the 40s in the fall of 1982, and that his party suffered substantial losses in Congress that November.

Obama has long shown an interest in Reagan's presidency. During Obama's campaign, he got under the skin of former president Bill Clinton when he characterized Reagan's presidency as one that "changed the trajectory of America" in ways that neither Clinton's nor Richard M. Nixon's had done.

After the New Deal and the Great Society, Reagan made government the enemy and, through tax cuts and generally unsuccessful attempts to cut spending, sought to scale down the size and power of Washington. What Obama proposed -- for the economy, health care and energy -- amounted to an attempt to reverse much of what Reagan had done. As Reagan transformed his political era, Obama hoped to transform his.

Obama didn't explicitly campaign on this theme. He often presented himself with the rhetoric of a centrist, though his policy priorities were those of an urban liberal Democrat, in contrast to those of, say, Clinton, a centrist from a Southern and heavily rural state. But Obama seemed keenly aware, as he outlined before his inauguration, that the public remained skeptical of Washington's power and that he would have to overcome that skepticism to carry out his objectives.

The election of 2008 and the economic collapse that occurred that fall altered perceptions, if not the reality, of the voters' message. The economic collapse seemed to prove that Republicans' faith in deregulation of the economy and in free markets was misguided, or so many Democrats thought at the time.

The election results, Obama said, represented "a correction to the correction." In other words, he meant his victory was a partial rejection of Reagan and the GOP. Still, he sounded cautious about the challenge of restoring faith in government.

Hours after that December interview, Obama met with his new economic advisers. They told him the recession was far worse than they had known and that avoiding a depression would require a far larger federal response than anyone had anticipated.

Administration officials say much of what they did to deal with the economy, in particular the $787 billion stimulus package and help for banks and automakers, was out of necessity and not ideology.

"The president had to deal with certain things and certain issues because of the economic crisis," said Joel Benenson, Obama's lead pollster during the campaign. "These were not matters of choice. . . . None of these reflect an agenda he campaigned on and, in fact, in doing a lot of them, he was very cognizant of the fact that they had big political downsides, that they weren't popular with the American people."

Benenson said Obama's goal has been to balance the scales on behalf of middle-class and working-class families, not to aggrandize the federal government. Obama's critics, however, see the administration's agenda as a liberal wish list writ large.

Regardless of what happens, Gingrich said, Obama has stamped himself as a big-government president. "Right now, they're faced with the question of him becoming a failed big-government president," he said. "If they succeed, they're still a successful big-government president."

William A. Galston, who was domestic policy adviser in the Clinton White House and is now at the Brookings Institution, said he thinks almost any other president facing the economic problems Obama was dealing with would have made many of the same decisions. The fateful step, he said, was to plunge ahead with health care as the next major initiative.

"After $2 trillion of intervention [by the federal government], a lot of Americans, a lot of independents, viewed it as a final nail in the coffin of the administration's ability to portray itself as a third way between big, liberal government and small, conservative government," he said.

Vin Weber, a former Republican congressman from Minnesota, said the Obama team's analysis that America was ready for a sharp change in direction was not as misguided as many conservative critics contend. When the administration launched the stimulus and the health-care package, he said, "they thought the country was at a very different place ideologically -- and had reason to believe that it was at a different place."

Since then, Weber said, the country has reattached itself to its more centrist moorings, or even moved to the right.

"When the Clinton administration faced similar difficulty, they were quite adept at reorienting themselves to the center ideologically," Weber said. "Can this administration and this Congress do that? It's not clear to me how they do that."

Growing partisanship

Obama begins his second year having failed to ease political polarization. "What I haven't been able to do in the midst of this crisis is bring the country together in a way that we had done in the Inauguration," he told People magazine recently. "That's what's been lost this year."

The new Post-ABC news poll underscores the degree to which there is a partisan divide in perceptions of the president -- more so than with any recent president other than George W. Bush. Administration officials blame the GOP for their near-unanimous opposition to his major domestic initiatives. Republicans blame Obama for not reaching out to them in a genuine way.

Nolan McCarty, a political scientist at Princeton University who has written extensively about polarization, said he was surprised that Republicans did not reach out more to Obama and that the president did not look for issues on which there was common ground with the opposition.

"The agenda for the first year was the Democratic Party wish list -- issues where Republicans and Democrats disagreed the most," McCarty said. "Some criticized him for not compromising more with Republicans. But the biggest mistake was not finding an issue that was analogous to Clinton's decision to work with Republicans on something like welfare reform."

Galston said he thinks Obama as a candidate misjudged the depths of partisan polarization. "I don't think he would have gone as far out on a limb as he did if he had really known how deep the polarization is," he said.

The question now is whether and how Obama will adapt in his second year.

Theodore C. Sorensen, who was counselor to John F. Kennedy, recalled the president's response when a reporter asked him in the fall of 1963 why his poll numbers had dropped from 70 percent to 56 percent over a matter of months. "Kennedy said, 'If my approval rating were still 70 percent after a vigorous congressional session, I'd feel I hadn't been doing my duty,' " Sorensen recalled. "He said . . . you can't measure great transformation in the country by taking the country's pulse every week."

Obama, advisers say, thinks much the same way -- that given the problems he has taken on and the decisions he has made, his lowered approval rating should have been expected. White House senior adviser David Axelrod said he told Obama a year ago a sharp decline in the numbers was likely.

So what lies ahead? In February 1982, facing difficult economic conditions and controversy over his economic and budgetary initiatives, Reagan famously announced that he would "stay the course." His party suffered in that fall, but the economy recovered and so did he.

Obama appears committed to his agenda, and Emanuel said Saturday that "the goals are still the same," citing administration initiatives on health care, energy and financial regulatory reform. But Obama also has shown a willingness to make mid-course corrections. The first clues will come when he delivers his State of the Union address. Whatever way he moves will have major consequences for the country, his party and his presidency.